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Category: Rough Diamonds

You probably have heard about “Sellers” requesting financial instruments to sell their diamonds. The problem is that 99% of such so called sellers are scammers.

How are these scams ran? Well, it is pretty simple, this is how most of these scams are set up. The alleged seller will request a financial instrument from the buyer in order to send out his stones, most likely an MT760. Which is an extremely dangerous instrument, as the alleged buyer will borrow against it to find and purchase the stones, or just borrow against it and run away.

Once the instrument is open and activated, the alleged seller will take the buyer hostage, and require the buyer to pay a “release fee” between $50,000 and $200,000 in order to release the instrument from the seller’s bank. See, this is the problem, if a buyer issues an instrument, the only way they can have this instrument cancelled, is only if the seller agrees to release such instrument with his bank in Africa, otherwise, the instrument can possibly remain in effect for month.

If this is the case, the buyer can possible be charged millions of dollars in fees from his bank in bank charges, which can easily put him on his knees. The scammers know this, thus they will require a “hostage fee” in order to release the instrument from their end.

The alleged seller may also request an MT103/23, which is a conditional wire, such wires are now illegal in the USA or most of Europe. Most Banks today will also require proof of product before they agree to release any types of instruments, in order to cut down on the frauds, and reduce their clients liability.

As a general rule, no real diamond buyers in the world will issue an instrument. Some may agree to some type of proof of funds, but most will only issue a POF AFTER they have done at least one deal with the seller. The most intelligent and common thing to do is to start with a small transaction between 100 and 500CT, than once buyer and seller build confidence, to simply increase the quantities for each deliveries after each closings.

First off, you must understand that diamond sales and sales process greatly varies from one Country to another. In some Countries, sales are entirely controlled by the Government, in others, not so much.

So what is so different about Botswana Diamonds? We have people contacting our Trade Desk offering rough diamond parcels from Botswana…really? Are these offer genuine? This answer is no, such offers do not exit, period!

What do you mean? Well, it is actually very simple, the Botswana Government has made a Join Venture with DeBeers in 1969 creating Debswana Diamond Company Ltd. which controls the market.

In order to jumpstart the economy of the Country, a Botswana law was enacted in order to mandate that all diamonds exported out of Botswana be cut and polished, in order to create employment, so no rough diamonds can exit the Country legally.

Given, some people are illegally smuggling stones out of every diamond producing Countries, however, all these ridiculous rough offers claiming to have Botswana origin are fake!

DeBeers even moved their head office from London to Gaborone a few years ago, and Gaborone now has one of the most extraordinary diamond facilities in the world.

In the Diamond Business, scammers are everywhere, from fake African Sellers to Western Brokers acting as hot shot Diamond Buyers all over the internet, fake rough diamond manifests are flying all over the internet like an Airbus 380 goes around the world, and than are being sanitized by brokers afraid to be circumvented on their commissions, which is even funnier.

These low life will act and pretend to be someone they aren’t, fake seller’s (mostly in Africa) will send you fake export licenses, manifests for astronomical amounts of diamonds, ranging from 10,000 CTS to 500,000 CTS, claiming to be able to supply such quantities monthly (LOL). 99% of these are fake, in order to be able to supply such quantities, you have to be a company like Alrosa or De Beers, and believe me when I tell you that these large mining companies do not send out such manifests through brokers on the internet.

Here are some examples of fake licenses from Sesay Moses of Global Mining Company S/L Limited, John E. Cole (CEO of Fashion Mining and Company SL Limited), these scammers and crooks can be very creative, will promise you the world and the story will change as they go on.

Scams can go from a request for Buyers to issue an SBLC, seller would provide a fake POP, once the Letter of Credit is open (few banks these days would still let you fall for these scams by the way), they would “take you hostage for ransom” and request a lump sum in order for their bank to release the instrument.

Others will simply set you up with corrupted local cops, get your parcel confiscated and get a cut back from the bribe. There are a million ways for these crooks to scam you over the internet, or on the ground.

The most important thing is never to pay anything up front, never to open any kind of instruments, and always transact at the government offices where the stones will be evaluated by a professional gemologist before paying any money.

The GGDO, The Government Gold and Diamond Office in Freetown Sierra Leone is the government agency in charge of issuing all export licenses for Gold and Diamonds if you want to export these commodities out of the country.

Such licenses can cost up to $45,000 per year, and without purchasing a license, or being able to use someone else’s, you will not be able to get your Kimberley Process Certificate to take the diamonds out of the country.

As of today, there are only 21 Companies with current Diamond Exporter’s Licenses, 40 with Diamond Exporter’s Agent Licenses, and 47 with Diamond Exporter’s Agent Certificate.

Most people will show you a fake license, and purchasing from these scammers can land you straight to prison, not to mention the fact that you will most likely lose your money. You will also need a Diamond Dealer’s License if you decide to purchase rough diamonds on your own.

If you decide to purchase rough diamonds in Sierra Leone, Madnox can save you lots of time, money and headaches with our operations on the ground in Freetown. Feel free to contact us at Vince@Madnox.com or call us for consulting services at +1-305-600-1814

Rough Rapport index has been falling since mid 2014. Many of the large diamond players such as Debeers and Petra had to lower their prices by 10%, Alrosa, the largest diamonds producer in the world lowered their prices by 16% in September.

This fall in prices comes primarily from a slowing Asian market, pressure from Indian buyers, and first and foremost from over production from mine to market by these large mining companies.

Regardless of the falling market, we anticipate prices to stabilize within the next 2 quarters, ultimately, the rough diamonds market will recover, and investments in rough diamonds or any precious commodities are still much safer than stocks, which are only backed up by useless paper.

Gold has been picking up steam recently, due to the volatile stock markets in Asia, and will most certainly keep climbing as the Chinese real estate markets slowly implodes in the near future.

An extremely rare 12 carat, flawless blue diamond, named the Blue Moon, will be sold at a Sotheby’s auction on November 11th in Geneva, and is expected to become the world’s most expensive diamond ever sold. Sotheby’s expects the Blue Moon to fetch up to $55 Million.

The Cullinan Mine has produced some of the world’s largest diamonds in the past and is one of Petra’s largest pit mines. Petra Diamonds is the largest rough diamonds producer is South Africa. Petra has seen a 33% drop in sales from the same period last year.

The Blue Moon’s original size was 29.62 CTS and was purchased, cut and polished by Cora International, a New York Cutting House, who took 6 months to polished the stones, and will be selling it in Geneva. Current world record is being held by The Graff Pink which went for $46.2 million in 2010.

Manicaland Province Marange Fields have been known to be some of the largest source of diamonds in the world in the past few years. In 2015, Zimbabwe’s diamond production is expected to drop from 5.9 Million CTS to 3.5 Million.

Three new mines started operations last year in the Marange Fields, however, the increase in supply has not been steady, as these mining operations are expected to have a lesser impact, due to the fact that these are not alluvial mines.

Zimbabwe had a tremendous supply of alluvial diamonds, however, these alluvial diamonds have been mined extensively, and alluvial supply is running short. Therefore minors now have to dig for rough stones underground instead, making it more difficult and more expensive to mine for rough diamonds.

This is the number one reason for the decrease in production in the Marange Fields. In order to optimize the management and production of these mines, the Government is in the process of merging five mining companies into one large corporation.

There are many reasons why Antwerp is on a down slope in the diamond industry. The first reason, is that you must pay 33.33% entry tax on the value of the diamond parcel you are bringing in from outside the European Community, regardless of the fact that you already paid for KPC’s in the Country of origin, so if you purchased rough diamonds in Angola for example, who has a 31% KPC tax rate, and want to import your rough diamonds to Antwerp, you will pay a double tax equating to over 64% of the rough stones’ value.

This will turn out to be the number one reason why Antwerp will ultimately be over run by cities like Dubai, where you have no double taxation, but at the end of the day, the responsibility for the upcoming slide of Antwerp will fall on the Belgian Government for these poor strategic decisions.

Another large nail in the coffin came this week, with the National Bank of Fujairah, owned in parts by the governments of Fujairah and Dubai, two of the seven sheikhdoms in the U.A.E., whom entered the diamond financing market in Antwerp roughly six months ago in order to capitalize on the shift in trade, targeting loans between $5 million and $50 million. The Bank will stop its operations in Antwerp and will focus on the Dubai market, which serves India as its principal client.

Diamond buyers will face a lack of financing after Antwerp Diamond Bank, the lender serving the industry for about 80 years, winds up its operations, removing close to $1.5 billion in funding to the industry. ABN Amro Bank NV and Standard Chartered Plc also curbed funding to the industry in Antwerp.